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2019 (1) TMI 18 - AT - Income TaxLTCG - addition after invoking section 50C - challenge to the DVO s valuation - quantification of depreciation - Held that - It is an unadmitted fact that the assessee had claimed the said factors to be having 10%, 15%, 10% , 5% and 25% depreciating value on the relevant capital asset. The DVO accepted the former four issues to the extent of 3% in first and 3rd , 2% each qua second and 4th whereas 5th issue of unauthorized structures stands rejected. It is therefore more a case of quantification of the said depreciation factors in the former four issues only. The authorities below have gone by this tribunal former remand order (supra) in rejecting the assessee plea to this effect. We do not find any merit in the same as the said issue of quantification was never adjudicated in remand directions earlier. It appears that there is a lot of difference between assessee s claim of quantification vis- -vis as that accepted by the lower authorities. It ranges between 3 to 10% qua 1st and 3rd aspects, going as high as i.e. 15% and 2% qua the second aspect of large land size and 5% and 2% qua the fourth aspect of sloping ground. We therefore deem it appropriate to treat this issue to conclude that larger interest of justice would be met in case the AO is directed to adopt fair market price of the relevant capital asset to be average of assessee s and DVO s valuation s issue - Appeal of the assessee is partly allowed in above terms.
Issues Involved:
Dispute over LTCG addition under section 50C of the Income Tax Act for assessment year 2006-07 based on valuation of capital asset. Detailed Analysis: 1. Dispute over LTCG Addition: The appeal pertains to the assessment year 2006-07 and challenges the addition of Long Term Capital Gain (LTCG) amounting to ?59,68,094 after invoking section 50C of the Income Tax Act. The primary issue in this case revolves around the correctness of the lower authorities' action in making this addition. The nature of the capital asset, its location, and the transfer in the relevant previous year are not in question. The CIT(A) affirmed the Assessing Officer's action regarding the LTCG addition. The dispute primarily centers on the valuation of the property and the objections raised by the assessee regarding the valuation conducted by the Departmental Valuation Officer (DVO). 2. Valuation Objections and DVO's Response: The assessee contended that the AO should have sent the matter to the DVO again for reconsideration, alleging a violation of the order of the Hon'ble ITAT. However, it was found that the DVO had already considered the objections raised by the assessee and had not found merit in them. The DVO's final valuation report addressed various objections raised by the assessee, such as irregular shape of the land, large land size, co-ownership, sloping ground, and unauthorized structures at the frontage. The DVO provided detailed responses to each objection, justifying the valuation without making any changes. Consequently, the AO did not find it necessary to refer the matter to the DVO again, and the final valuation was adopted. The Tribunal upheld the assessment made by the AO, concluding that the objections raised by the assessee were adequately considered and addressed by the DVO. 3. Tribunal's Decision and Quantification of Depreciation Factors: The Tribunal observed that the authorities below had rejected the assessee's challenge to the DVO's valuation based on various factors affecting the capital asset's value. The quantification of depreciation factors related to the shape of the land, land size, co-ownership, sloping ground, and unauthorized structures was a key point of contention. The DVO accepted certain depreciation percentages for the first four issues raised by the assessee but rejected the claim regarding unauthorized structures. The Tribunal noted discrepancies between the assessee's claimed depreciation percentages and those accepted by the lower authorities. To ensure justice, the Tribunal directed the AO to adopt the fair market price of the capital asset as an average of the assessee's and DVO's valuations. This decision aimed to address the discrepancies in quantification and ensure a fair outcome, without setting a precedent for future cases. 4. Conclusion and Partial Allowance of Appeal: In conclusion, the Tribunal partly allowed the appeal, directing the AO to adopt an average valuation based on the assessee's and DVO's assessments of the capital asset's fair market price. The decision was made to uphold justice and provide a balanced resolution to the valuation dispute. The order was pronounced in open court on 29.08.2018, emphasizing the importance of fair valuation practices and adherence to legal procedures in tax assessments.
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